How can health insurance in Switzerland be made cheaper?

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Over the last two decades, the cost of health insurance has gone up an average of 3.7 percent per year in Switzerland and people are well and truly fed up.

Health insurance costs are a hot topic in Switzerland right now. Speak to anyone in the country about what concerns them most and they are likely to mention rising premiums.

“It's two to midnight,” said Swiss price watchdog Stefan Meierhans recently, describing the current situation. Meanwhile the CEO of health insurance Santésuisse said the system was “gradually approaching collapse”.

Because while almost everyone agrees Switzerland has fantastic healthcare, it comes at a high price. Healthcare costs in 2015 were equal to 12.1 percent of GDP, or second only to the United States, OECD figures show.

It's same story for per capita spending: Switzerland is set to spend 10,500 francs per person for healthcare in 2018 this year, according to the KOF Swiss Economic Institute at Zurich's ETH University. Only the US spends more.

These costs are rocketing skywards too – around four percent a year, says the KOF institute.

“The Swiss health system is like an unguided missile. It behaves like a junkie that needs more and more money all the time,” health economist Heinz Locher told Swiss newspaper Blick recently, before calling for the current system to be completely overhauled.

While Switzerland is not alone in this – many developed countries are seeing ballooning healthcare costs as they deal with ageing populations and increased expectations of what healthcare can provide – the Swiss situation is exacerbated by the fact only 64 percent of health funding is publicly financed.

Compulsory insurance

Swiss people fund around a third of all the country's healthcare costs though a compulsory insurance system. When you get a bill in the mail every month, health care costs are very real.

To make matters worse, the cost of premiums for this obligatory insurance have shot up twice as fast as GDP and wages since 1996. Out-of-pocket expenses, or the amount people have to pay before health insurance kicks in, have climbed steadily too.

And with 22 percent of Swiss people saying in 2016 they went without necessary medical care because of costs, there is no question something needs to be done.

Fewer hospitals, more generic medicines

Many of the ideas being proposed to cut costs – an increased use of generic medicines, for example – have been floating around for a while.

But a heated recent debate has thrown up a few surprises.

“What's new in the current debate is that previously ‘managed competition' has been the order of the day when it comes to Swiss healthcare,” Simon Wieser a health economist who heads up the Institute of Health Economics at the Zurich University of Applied Sciences (ZHAW) told The Local recently.

“Now we are even seeing centrist political parties talking about caps, like the Christian Democratic Party (CVP) with its Kostenbremse (cost brake) initiative,” he added, referring to a proposal that would see increases in health insurance premiums more closely tied to economic and wage growth.

The CVP's proposal – which is light on details – also called on doctors and hospitals to avoid “overtreatment” of patients either through medications or surgery.

“It's probably correct that we are seeing some overtreatment. There is an incentive to provide ambulatory care,” said Weiser on this point.

“Where there is a fee-for-service system, another examination means more money for the doctor. This is particularly important for the 15 to 20 percent of patients who have [more expensive] private health insurance and not just basic insurance [which every Swiss resident is obliged to have],” he added.

“Overtreatment is a difficult issue but one that is important to address. We also need to move more in-patient services to an out-patient setting.”

Asked to identify where else Switzerland could reduce health care costs – an essential move is insurance premiums are to come down – the health economist pointed out what many have already noted as a serious problem: the relatively large number of hospitals in the country.

“It would be more efficient to have less hospitals: and the quality would be better if we had more specialised hospitals. Small hospitals are not necessarily expert in procedures that are carried out less often,” he said.

But the health economist also noted there were cultural imperatives at play. “Many people want a local hospital. They want their children born in their canton. This is clearly inefficient as it means we have many small hospitals,” he noted.

“At the same time, if you have a hospital and you want a good hospital director and good doctors, you have to offer them the chance to carry out a variety of procedures,” he added, explaining why the same treatments are often offered at hospitals close to each other.

Wieser noted however, that the canton of Zurich had introduced “minimum caseload requirements” as a way to address this oversupply. Theses requirements ensure hospitals are suitably prepared to carry out certain procedures.

“This is a step in the right direction,” he said.

But it is another suggestion from the economist that move prove a bridge too far: “This is a difficult one too, because it is hard to ask doctors to earn less money – but some doctor's incomes are very high.”